Opinion

W21: Wine Update

Published Jun 2, 2023
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W21: Wine Update

In W21 in the wine landscape, year by year, Sicilian wine markers in Italy, prefer to replace some international varieties with indigenous cultivars, with a focus on Grillo and Nero d'Avola. Between 2000 and 2022, the total area of Sicily cultivated for Grillo white grape more than quadrupled, increasing from 2,141ha to 8,579ha. Nero d'Avola has expanded somewhat more moderately, from 14,259ha in 2000 to 15,387ha in 2022. Moreover, the area grown with Nero d'Avola decreased by 1K ha between 2017 and 2019, from roughly 15.5K ha, only to increase again by 2021. The hectare of Chardonnay, Syrah, Merlot, and Cabernet Sauvignon has also decreased significantly, primarily due to global warming. From 2017 to 2021, more than 20M bottles of Sicilia DOC Grillo were produced, an astounding 489% increase. European states and more countries, including the UK, the US, Australia, Canada, and Chile, appealed to the WTO and the EU Commission against the Dublin law, which requires alcoholic drinks to be labelled with comprehensive health warnings, linking them to several fatal illnesses. On bottled and canned alcoholic beverages, labels need to include comprehensive warnings regarding the calories in all alcohol as well as the risks of cancer, liver disease, and drinking while pregnant. Only products sold in Ireland will have these warnings.

Plans by the UK Government to change EU laws on the production and marketing of wine could provide a USD 192.63M boost to the UK wine industry. This includes allowing wine producers to pick from a wide range of vines, including disease-resistant varieties. The restrictions that previously prevented the production of new products are now being lifted. Bottlers can convert imported wine into champagne. Packaging regulations, such as the sealing film of some champagnes, are also being lifted to allow for cheaper alternatives. British wine production has substantially increased in recent years, growing mainly in the south of England, where the Gulf Stream keeps the climate temperate. The US, Canada, Norway, and the UK are the top exporters of British wines. Britain, however, falls considerably behind more established wine-producing countries such as Italy, France, or Germany. The US is the largest wine market in the world and Australia's top export market in terms of value. Australia now ranks third in volume (after Italy and France) and fourth in value (behind Italy, France, and New Zealand), with a 14% share of the total volume of imported wine and 10% by value. Since 2015, the number of drinkers in America has decreased. Millennial and Gen Z drinkers' consumption decreased more quickly than the general population. The impact of the pandemic, specifically lockdowns, and closures of on-premise consumption, led to fewer opportunities for recruits to be introduced to wine.

Spanish wine sales in March reached USD 3.28B at an average price that grew by 6.5% YoY for packaged wines to USD 2.83/liter and by 19.9% YoY for bulk wines to USD 0.49/liter. The US continues to be the top value market for Spanish bottled wines, with USD 68.41/M, a 23% YoY increase. Lastly, in Q1 of 2023, 30.2% more Brazilian tourists and 24% more Chileans entered Mendoza, Argentina, compared to the same period in 2022. This contributes to the domestic economy as Brazilians have an important focus on the consumption and purchase of wines. Wine has grown a lot in Brazil, and it is now quite typical to find Brazilians who are well knowledgeable about it, including about niche or lesser-known varieties.

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